Lenovo Captures Record PC Market Share, Sees Q1 Sales Soar

The Chinese PC maker Thursday reported a record quarterly market share of 15 percent, driven by soaring sales of its laptop and tablet PCs both in the U.S. and its own home base of China. According to Lenovo, which Gartner has pegged as being the second largest PC maker in the world behind HP, its first fiscal quarter marked the eleventh in a row that it outgrew HP, Dell, and Acer.

"Even as the overall market dropped, our global market share reached another historic high, 15 percent," said Lenovo CEO Yang Yuanqing during a conference call with investors. "Just a year ago we were behind the number one [PC maker] by just six points, but now we have narrowed the gap to just seven-tenths of a point."

[Related: Lenovo: We Aren't Sweating Microsoft Surface ]

Lenovo saw its first quarter revenue shoot up 35 percent year-over-year to $8 billion, and its net income jump 30 percent year-over-year to $141 million.

Laptops and Ultrabooks, including the new IdeaPad U310 and U410, accounted for a hefty 54 percent of Lenovo's total worldwide sales for the quarter and were the driving force behind it nabbing its record quarterly market share. Laptop sales were up 23 percent year-over-year, pulling in $4.3 billion.

Lenovo's booming laptop and Ultrabook sales represent a bright spot in an otherwise stagnant PC market. Chip manufacturers AMD and Intel, along with rival PC makers HP and Toshiba, have reported flat or declining revenues for their PC segments this quarter, with both AMD and Intel suggesting that consumers are holding off purchases in anticipation of the Windows 8 launch this fall.

Lenovo also reported strong desktop PC sales for the quarter, with sales jumping 26 percent year-over-year to $2.5 billion. Much of this growth was attributed to the launch of its new ThinkCentre M92p "tiny" desktop which, measuring just the width of a golf ball, is being targeted at space-constrained SMBs.

Lenovo's Mobile Internet Digital Home (MIDH) group, comprised of its smartphone, tablet, and smart TV offerings, saw sales skyrocket a whopping 173 percent compared to the same quarter last year, pulling in $587 million. Lenovo grabbed its highest-ever smartphone market share of 11.2 percent during the three-month period, with its subscriber base growing primarily in China.

The new IdeaTab S2109, an Android 4.0-based tablet targeted at the consumer market, was also launched during Lenovo's first fiscal quarter. Specific sales figures for tablets were not broken out, but the company said sales were about three times as high as they were during the same period last year.

Lenovo reported growth across China, Europe, Latin America and North America, where it pulled in $1.2 billion in sales, a seven percent year-over-year jump.

Despite a recently announced partnership with storage giant EMC that suggests its getting more and more bullish in the server market, Lenovo was mum on sales of its new ThinkServer RD530 and RD630 offerings. Launched in May, the new servers veer from Lenovo's traditional ThinkServer lineup, which sell primarily in China, delivering more than twice the memory bandwidth and increased scalability to accommodate larger workloads. Both are powered by Intel's Xeon E5-2600 processors.

Analyst firms including Technology Business Research (TBR) have projected that expanding its reach into the global server market will ultimately drive up revenue for Lenovo, but that that growth will take time, as Lenovo first needs to capture market share away from rival server vendors HP and Dell.

"It will take time and aggressive pricing for Lenovo to build scale in the global server space and take share from established players such as HP and Dell," TBR analysts wrote Thursday. "Consequently, TBR does not expect any significant margin impact from Lenovo’s server business in the next year."

PUBLISHED AUG. 16, 2012